ACC1000 Lecture Notes - Lecture 8: Cash Flow, Accrual
Document Summary
Accrual accounting is a function of time: Recording the transactions in the period they occur, regardless of whether cash has been received or paid (except cash flow statements) Annual reports for any business in new zealand (including public sector) are prepaid using accrual accounting. Under accrual accounting, the transaction is recorded in the period the transaction occurred, regardless of whether or not cash has changed hands. With cash accounting, the transaction is recorded when cash changes hands, regardless of the period the transaction occurred. 15 june: expense up 600, a. p. up 600, bought materials on credit. 19 june: income up 1000, a. r. up 1000, client purchased on credit. 28 june (pay for materials already been expensed): reduce a. p. by 600, reduce cash by 600. 19 july: get money from client, a. r. reduced 1000, cash increase by 1000.
